Most organizations profess to practice Performance management. This is myth, because most organizations do not engage in true performance management. There are many reasons for the perpetuation of this myth, which I will be discussing in this oped piece. The intentions are noble but execution suffers from the intense realities of a frail psychological eco-system that exists in most organizations.
What do I mean by the phrase "a frail psychological eco-system"? In reality managers who have to discriminate and weed out the "good", "the bad" and the "not so bad" employees do not exercise the mental and verbal disciplines of managing employee performance - that is confronting the non-performers and rewarding the better ones. All of us like to be good guys and gals and we really do not want to sit in judgment of others, lest others also judge us unfairly. We are all very insecure in organizations that have all kept us on our toes with job insecurity. It is much easier to be delightful rather than being a nasty truth seeker. Thus most managers take the path of least resistance - we tend to evaluate everyone at average or above. Listen, why would a Manager want to rate someone poor or extremely bad? Does that not reflect negatively on the manager themselves? One can tell a manager you have "bad" employees because you are a bad manager. Ever thought of this dimension before? So the main reason performance management is a myth is the fact that the results of the process is skewed towards the upper end of the performance rating scale.
A corollary to this dimension most organizations use a "performance appraisal" system to evaluate employee. These systems to say the least are subjective but tend to attempt objectivity with the imposition of a rating scale, Well guess what, based in the argument presented in the previous paragraph the evaluators exercise "skewed" rating profiles - most of the ratings are average or above. If there were indeed a true performance management system then one would have seen a more normal distribution. This is not a reality, the reality is an upward distribution rating profile.
Then take the case of "Executive Compensation Madness". Today one can find a negative correlation between the growth in executive compensation and the growth in corporate profits. Executives make the big bucks in spite of not making the necessary profits to satisfy shareholder interests. Thus when there is really no executive performance management why should managers practice what the executives preach but do not practice. There is no "walking the talk". So most organizations mossy along their merry way by giving lip service to performance management and engage in maximizing the accouterments of the system, rather than practicing the organizational philosophy in its true spirit.
Also in recent times there has been a marked "softening" of the workplace. Form has replaced substance. It is very important now to be "sensitive" towards the feelings of others. Behavioral dimensions are emphasized, as much if not more than, skills, knowledge and abilities when performance judgments are made. Thus by its very nature good or bad behavior is judgmental and thus subjective. Beauty is in the eye of the beholder. Hard facts are sacrificed in comparison to results. Managers are being judged on their abilities to show empathy. All of this mussy stuff is not conducive to hard factual of performance based on results.
And finally the connection between pay and performance is almost a joke. Whenever an organization ties the performance management system in time with the pay management process they write themselves the ticket to total disaster. When a manager is giving an employee a performance appraisal and the employee knows that at the end of that session, the manager is going to tell the employee how much of a pay increase they are going to get, you can bet your bottom dollar that the employee is thinking "boss cut performance appraisal non-sense, just tell how much of a pay increase am I going to get". "Show me the Money!" In this scenario the employee gives a deaf ear to anything the manager is saying about their performance - good, bad or indifferent. The management of performance is a "holistic" process. As long as practice ties pay to it then the value of a performance dialogue between manager and subordinate goes out the window.
So I say do away with formal performance appraisals systems. They do not work. Over my long career in the many organizations I have been associated with, I do not know of a single organization that can hold their heads high and say that their performance management/appraisal system works. When you do away with these HR perpetuated systems much overhead expenses will be saved. Make it informal. Leave it up to your managers. Encourage continually performance management dialogue between managers and employees. Don't introduce or use rating based appraisal processes because if you do that, you will introduce a negative "punished by rewards" culture.
Performance Management as currently practiced only introduces negative angst into the culture thus destroying morale and motivation.
